Cliffs Outlines Base Case for Ontario Chromite Project

Cliffs Natural Resources has released “base case” project information for potential development of its Black Thor chromite deposit in the McFaulds Lake area of Northern Ontario. The base case considers development of an integrated project that would begin with chromite mining and end with a ferrochrome production facility. Cliffs released the base case to provide a basis for discussions with project stakeholders and the outline does not definitively describe how the project will be developed, but it does provide a look at what Cliffs claims may become one of North America’s most unique natural resource developments.

Cliffs’ chromite project involves the largest known North American chromite deposit, located in one of the most remote areas of Northern Ontario. Exploration to date has consisted of geophysics and diamond drilling to delineate the Black Thor chromite zone. The current inferred mineral resource estimate indicates the deposit contains approximately 69.5 million mt at a grade of about 31.9% Cr2O3.

The base case assumes development of an open-pit chromite mine, with associated housing and other infrastructure. The mine would produce 6,000 to 12,000 mt/d of ore and 65,000 mt/d of waste rock. A concentrator and an associated load-out facility would be located at the mine site. The proposed mine would have the potential to transition to underground mining 10 to 15 years after mining begins.

A ferrochrome production facility (FPF) using closed electric arc furnaces would be developed to produce ferrochrome. The availability of a large, reliable, long-term and cost-competitive supply of electricity is a requirement for the FPF. Current estimates of the furnace requirements are approximately 300 MW. Cliffs has identified only a few places in Northern Ontario where this power requirement can be met. A brownfield site within the City of Greater Sudbury was identified as the base case location. Cliffs has plans to continue to meet with other municipalities, including Thunder Bay, Greenstone and Timmins, to continue discussing the potential of locating the FPF in their community.

“At current provincial power rates, there isn’t a location in Ontario economically viable for Cliffs to build the FPF,” Bill Boor, president of Cliffs’ Ferroalloys unit said. “Despite this, we have named Sudbury as the base case location, which we believe is representative of a technically feasible site. The viability of an Ontario-based FPF and final selection of the location are still being evaluated.”

At full capacity the FPF would produce 1,500 mt/d of ferrochrome for sale to stainless steel producers in North America and worldwide.

An integrated transportation system would link all project components. The system would include a permanent, all-season road to allow the movement of people, equipment, supplies, lump ore and concentrate between the proposed mine site and existing Ontario rail infrastructure. The evaluation process has included a comparison of road and rail options within several transportation corridors. The northern extension of Road 643 from Nakina, located 350 km directly south of the mine site on the CN transcontinental rail line, has been identified as a realistic and viable option.

Cliffs expects to complete the pre-feasibility study for its chromite project by September 2011. If the pre-feasibility study is favorable, a full feasibility study will begin immediately afterward and will be targeted for completion in late 2012.

“Assuming prefeasibility and feasibility studies are favorable, we expect to begin production in 2015,” Boor said. “To achieve this target, we will continue our discussions with First Nations, interested individuals and all levels of government. We continue to be very excited about the potential to develop this project for the mutual benefit of Ontario, the First Nations communities and Cliffs.”